Roth IRA Conversion Classified as Excess Contribution Even After e-Filing Amended Return Using Intuit Rep Guidance

[caryneudahls]

I used TurboTax Premier 2023 to file my taxes because I had just retired and had done a standard to Roth IRA conversion.

The guidance TurboTax provided, following the 'easy" instructions, was miserable!

There was another person's question on this site that was essentially the same as mine: why did the Premier product not provide clear directions for filing with a Roth IRA conversion, such that the conversion was classified as an excess contribution by TurboTax, and so the IRS?

After being notified by the IRS of my return being errant, I contacted Intuit and followed the instructions provided by the representative to file an amended return to correct this.

After not hearing from the IRS for the allotted period of time, I called them and was told the amended return changed nothing, so that's why I didn't hear back from them.

Thank you, Intuit, and thank you IRS!

So here it is almost October and it's been recommended that I get a tax attorney to fix this.

SUCH SHOULD NOT BE!

Has TurboTax 2023 been updated so upon filing my now necessary amended amended return,  the standard to Roth conversion is going to be recognized by the IRS?

Equally important, are the "easy" instructions for tax year 2024 being fixed so this can't happen to me or others making another conversion in the 2024 tax year?
I am really, really perturbed right now.

[tagteam]

Please check back later. I will page @dmertz.

[VolvoGirl]

Sounds like you entered the ROTH conversion also as a new contribution?  You only enter the 1099R for the conversion.   It was not a new contribution.  You should have skipped that part.  

[caryneudahls]

That is indeed what happened with the initial filing because the instructions were NOT clear, even though I went through every subsection in TurboTax I could find on the subject, as well asto this community center, where an answer was not yet available,

But why wasn't the conversion acknowledged, following the Intuit guidance I was provided for filing the amended return?  How do I make sure I don't wait the mandatory couple of months before contacting the IRS and finding out nothing has again changed from their perspective when I file the amended amended return?

This is a reminder that it's always best to provide clear guidance upfront, given the grief that comes with "easy" instructions that are not sufficiently detailed to provide the necessary goiudance to do it right the first time.

[VolvoGirl]

The ROTH IRA conversion should only be on the original return on 1040 line 4b.  Was it there?  You don't have to amend that part.  On the Amended return you only need to take out the separate IRA Contribution from the Deductions section.  

This is a common question we've answered a lot.  Did you post a prior question for it?  

[caryneudahls]

My original !040-SR has nothing in line 4a and my conversion amount, taxable, in line 4b.

Schedule 2, line 8, has the amount of tax assessed for 2023 (and every year thereafter since TurboTax did not treat it aa a conversion).

You mention taking out the separate IRA Contribution from the Deductions section.

Where is that (what Form or Schedule and line)?

I am not seeing any place that the amount of the conversion was deducted from my taxable income.

[VolvoGirl]

The deduction for a IRA Contribution is on Schedule 1 page 2 line 17.  But if you were not eligible to deduct any IRA then it wouldn't be deducted and the excess contribution tax is still on schedule 2. 

The IRA contribution is entered under

Federal On left

Deductions and Credits

Then scroll down to Retirement and Investments

Traditional and ROTH IRA Contributions - Click the Start or Update button

[caryneudahls]

I was not eligible to deduct any IRA, so there was no deduction, and the excess contribution tax was indeed on Schedule 2. line 8.  In my amended return that tax is gone from Schedule 2, and so on my 1040-X, line 10, other taxes is reduced by the amount that was in Schedule 2, line 8, on my initial return, as is the amended amount on line 11. I asked for the amount originally on the Schedule 2, line 8, to be refunded.  After waiting two months per IRS directive, having not received a written response from them, I called and was told that, based on their review of my amended return, submitted electronically, no change in taxes was applicable.

So what gives?  I did notice in going through the Deductions and credits, Traditional IRA and Roth IRA section again, TurboTax had only the box for Traditional IRAs, not the one for Roth IRA checked as well. Could that be what screwed up the amended filing?

[dmertz]

Which Part of Form 5329 shows the excess contribution?

If you made no regular traditional or Roth IRA contributions, simply delete the IRA Contribution Worksheet.  If you made a traditional IRA contribution and there is nothing in Part III of Form 5329, delete the IRA Contribution Worksheet and reenter your traditional IRA contribution.

[fanfare]

You don't nee a Tax attorney to amend your return for this situation

You can prepare Form 1040-X by hand if TurboTax is not working for you.

If you do it this way, you have to attach the relevant Forms or Schedules, that are new or changed due to your amendment, but not revised Form 1040.

@caryneudahls 

[caryneudahls]

This is the route I'll go. Thank you for the insight which pretty.much mirrors what the IRS said to do, verbally, when I finally got ahold of them.